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Net Worth – March 2008 March 30, 2008

Posted by pf in Net Worth Update.
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One year ago, I posted my very first net worth update. At that time, my net worth was $515,583. As I post the update for this month, I am currently at $577,487. In that time period, I have improved my net worth by just over 12%. While not a “lights out” gain, I think it’s very solid and would count myself very fortunate if I were able to sustain it throughout my lifetime.

As I look at the past year, I noticed that I increased my assets by about 8%, while barely showing any progress on reducing my overall liabilities in terms absolute dollars ($244,634 in 2007 vs. 244,009 in 2008). I would like to see this a bit higher, but would not expect huge gains as:

  • Almost 95% of my overall liability is mortgage debt and will only be drawn down gradually over the course of a year (I’m not trying to accelerate the payoff)
  • I do participate in some credit arbitrage (have significantly increased my credit card balance versus a year ago)

(more…)

Spring: Lawn Services and Convenience Checks March 25, 2008

Posted by pf in Credit Card, Expenses and Savings.
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Ah, spring is finally starting to push itself to the forefront and help us leave behind one of the most dreary winters I can remember behind. Of course, like the changing seasons comes a new barrage of advertisements with catchy phrases that work the word spring into it. More specifically, there are two that I notice which are particularly annoying:

1) Lawn Services – Whether it be flyers or richly colored advertisements from the bigger services, they try to convince you that your lawn will be so much more beautiful is you use their services. Also, of course, is the convenience factor (they take care of everything). Personally, I have bought into this before. When we first moved into our house, I really wanted our lawn and trees to start off nicely and paid for the pleasure to the tune of $35 /month. As far as I can tell, it was a good price. However:

  • You can achieve the same if not better results yourself
  • It definitely takes some time to do, but for most of us, we could use the sunshine and exercise anyway
  • Also, for most of us, $35 / month (and often quite a bit more) is real money saved…particularly when in debt. Even if you subtract the costs for purchasing the materials for yourself.

In general, I think lawn services are just another way to spend your precious funds on something you don’t really need and be had for less if you are willing to do it yourself.

2) Credit Card Convenience Checks – I have written about convenience checks before.  Aside from the fact that I feel they are putting me at some risk by mailing these live checks, I also think they are a huge waste of money:

  • Almost all (I actually think it’s 100%, but I can’t be sure) of them have a “fee” of 3% or so with a minimum of $10 or a maximum for as much as $90 for the pleasure of using them.  Right off the bat, you’ve already given away money for the pleasure.
  • It’s just an extension of your credit card.  If you’re going to continue to use credit, then why bother with convenience checks?  You can take up one of those 0% offers or just use the one you’ve already got.
  •  For those of you in debt, it just another way to perpetuate the horrible cycle you already find yourselves in.

Under certain circumstances, I could imagine one of these convenience checks may serve a purpose.  For example, if they offered a promotional fixed rate on the balance which was better than anything you already had.  Of course, you still have to spend money, but if you were going to anyway, then why not?

For myself, I take about 10 seconds to discern whether or not they might be giving me a deal of a lifetime (they aren’t) and then proceed to shred them.

Some People Are in Bad Shape March 22, 2008

Posted by pf in Expenses and Savings.
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Today I ran across a piece on CNNMoney entitled America’s Money: In their own words.  It was 19 quick snapshots about different people’s current struggles with money.  In a word…depressing.

While it’s no secret that Americans are over their heads in debt and many are struggling financially, to read them and see their photos really brought it to life.  I read each and every one.  At the end, I found myself very thankful that:

  • I am gainfully employed
  • I have adequate health insurance
  • I have virtually no debt except for my mortgage

Although all financial hardships can not be avoided, it is clear that many situations are easily prevented.

SPEND LESS THAN YOU EARN.

Common sense, yes?  Unfortunately, the old saying that “common sense is not so common” rings loud and true in personal finance as in life.